Monthly Archives: December 2012

I will be holding office hours at The Center on the first Friday of every month (my litigation schedule permitting), starting on January 4, 2013, from 9 – 10 AM. Please feel free to stop by to talk about anything. Visitors can also see the Council on Aging in action, a vibrant organization with lots going on.

STATE HOUSE, BOSTON, DEC. 20, 2012..State and municipal employees would have to wait until they are older and put in more years of service to qualify for retirement health benefits under a proposal being embraced by the Patrick administration to cut future benefit costs by $20 billion over the next 30 years.

Gov. Deval Patrick intends to file a retiree health benefit reform plan as part of his fiscal 2014 budget proposal in January that will include the recommendations of a commission that has spent the past nine months reviewing retiree health care costs, said budget chief Jay Gonzalez. He called the plan a “very significant change.”

“In order to present a fair retiree health benefit for employees we need to change the system and the benefit to make it affordable over time and that’s what this reform aims to do,” said Gonzalez, the governor’s secretary of administration and finance.

A commission studying retiree employee health care costs voted 11-1 on Thursday to recommend an increase in the age and years of service required for a state employee to be eligible for health care coverage in retirement.

Shrewsbury Town Manager Dan Morgado, a representative on the commission of the Massachusetts Municipal Association, was the only vote against the recommendations.

The final report adopted by the Commission to Study Retiree Healthcare and Other Non-Pension Benefits recommends increasing the age of eligibility for the majority of state employees in Group 1 from 55 to 60, in line with changes made in 2011 to the state pension system.

The commission also recommended increasing the required years of service in state or municipal government from 10 years to 20 years for an employee to qualify for retirement health benefits. The state currently pays 80 percent of a retiree’s health insurance premiums. Under the new proposal, an employee with 20 years of service would be reimbursed 50 percent of their premiums costs, increasing to 80 percent for those with 30 years of service or more.

The changes would save the state and municipalities $20 billion over the next 30 years, according to Gonzalez, who said the state’s current health benefits for retirees are “among the most generous in the country right now.”

The commission estimated the total unfunded cost of retiree health benefits at the state and local level if the system remains unchanged at $45 billion to $50 billion over 30 years.

The changes, if approved by the Legislature, would be applied to current employees, with some carve-outs and exemptions for those close to retirement. Gonzalez said he thought the package had “a very good chance of passing.”

“This is a strong recommendation of strong reforms to our retiree health benefit structure that will help put the state and municipalities on a path to fiscal sustainability,” Gonzalez said.

The commission was created as part of the pension reform law signed by Patrick in November 2011, and included representatives from the MMA, the AFL-CIO of Massachusetts, the Retired State, County and Municipal Employees Association, the Patrick administration, the Treasury and the House and Senate.

Sens. Jack Hart (D-Boston) and Michael Knapik (R-Westfield) and Reps. John Scibak (D-South Hadley) and F. Jay Barrows (R-Mansfield) also voted in favor of the recommendations.

“We all realize this is a very real challenge and real problem we needed to get our arms around and be part of the solution, said Shawn Duhamel, a commission member representing the Retired State, County and Municipal Employees Association. “I think the proposal that has been put forth that was largely the product of the AFL-CIO and our association achieves not only $20 billion in savings for the next 30 years but provides long-term protections for our members.”

Duhamel called the final recommendations a “tough sell” to many members of his association who will see that $20 billion in savings come out of their pocket. “Given the situation we face, there isn’t a perfect solution, but we’ve done our best,” Duhamel said.

Employees with 20 years of service who are within five years of retirement age would be exempt from the changes, as would employees within five years of qualifying for Medicare eligibility who are within one year of vesting for health benefits.

Teachers participating in Retirement Plus who are 57 or older and are eligible for their maximum retirement benefit would also not see any change to their benefits, and those on disability retirements would be exempt until January 2014 when national health reform kicks in, offering new subsidies for their insurance.

Gonzalez and Duhamel also said the proposal seeks to protect those current employees close to retirement. Employees aged 50 or older with 15 years of service, or 55 and older with 10 years of experience would be eligible to have 50 percent of their health premiums covered in retirement.

While the state currently covers 80 percent of retiree health premiums, cities and towns are free to negotiate their own premium sharing agreements with employees and retirees. The commission’s report will recommend that municipal contribution levels be frozen for a period of three years after the law is enacted, and would prevent communities from changing those rates in the future for existing retirees.

Morgado could not be reached for comment, but the Massachusetts Municipal Association raised concerns about the restrictions on negotiating premium splits in a statement.

“The MMA opposes a recommendation to permanently freeze the health insurance contribution rate for retirees once they retire. This unaffordable provision would prevent cities and towns from making adjustments to a major budget item in order to adapt to changing fiscal conditions and would offset a significant portion of the potential savings in many communities,” the MMA said.

Andrew Powell, the AFL-CIO representative on the commission, said the current system was “unsustainable.”

“There was a recognition that in order to preserve affordable health care for public employees and retirees we had to work on a solution and strike a balance between preserving benefits and the fiscal needs of the state and local government,” Powell said.

Nikolaos Athanasiadis lives at 30 Quarry Road with his wife Reka. Nick and Reka have lived in Medfield since 1995, first living on Tubwreck Drive before building their current home 2 years ago. They have three children ages 21, 14, and 12. Nick has degrees in Physics and Computer Science from Brandies University. Nick is a Software Engineer for Akamai Technologies and is an academic tutor and owner of the Math Connection. Nick was a candidate for Selectman in 2012.

Martha Festa lives at 16 Quail Run with her husband Michael. Martha and Mike moved to Medfield in 1990 and they have three children ages 24, 21 and 19 who were educated in the Medfield Public Schools. Martha holds a BS in Chemical Engineering from UMass Amherst, an MBA from Babson College, and has 18 years work experience in industry as a Process Research Engineer, Financial Analyst, Quality Control Manager, Project Manager and Operations Manager at Bayer Diagnostics in Medfield. Martha has extensive volunteer experience with our schools as CSA Treasurer at Dale Street and Blake, Co-President of the Boosters at MHS, and she has worked with programs such as Medfield Neighbor Brigade, St. Edwards Haley House Ministry, fundraising for the Officer McCarthy Children’s Fund, Medfield Turf Project, Warrior Golf Tournament, and recently becoming involved with the Angel Run. Martha has been a member of three Principal Search Committee’s, acting as Co-Chair in 2011.

Michael Marcucci lives at 3 Causeway Street with his wife Emily. He was born and raised in Hamden, CT, and attended Harvard where he met Emily, who grew up in Wellesley. Michael attended Boston College Law School. Michael is a partner in the Boston office of the law firm JonesDay with expertise in business, tort, and securities litigation. Before moving to Medfield in January 2008, Michael and Emily lived in West Roxbury. They have seven children ranging from a 6th grader at Montrose, a 3rd grader at Wheelock, a first-grader and kindergartner at Memorial School, a pre-schooler at Woodside Montessori, and 2 year old twin boys at home. Michael has coached youth sports and his kids have been involved in Girl Scouts, summer swim team, and a great variety of sporting activities. Michael is a trustee of the Montrose School.

Thomas C. Marie lives at 72 Pine Street with his wife Barbara. Tom and Barbara have four boys ages 17, 15, 12 and 10 – all in the Medfield Public Schools. Tom is a graduate of Stonehill College and he is the President and Owner Doublestone Associates. Tom founded Doublestone 11 years ago as a sales agency for manufactured products. Prior to that, Tom was Director of Sales at Tompkins Industries for 10 years. Tom has provided dedicated service to youth in our community as a sports coach and advisor. He is also active at St. Edwards Parish and with his alma mater, Stonehill College.

Appointments to the Medfield Warrant Committee2003-2012

Under Section 2.9 of the Medfield Town Charter, the Moderator has the duty and privilege of appointing nine members to the Warrant Committee. The Warrant Committee recommends the annual town budget for vote by the town meeting and fulfills all the duties of a finance committee as stipulated in the Massachusetts general laws. Medfield’s Warrant Committee has a proud and dedicated heritage of service to Medfield through collaborative deliberation, dialogue, study, experience and insight. The following is a list of Warrant Committee members appointed or re-appointed in my first ten (10) terms as Medfield’s Moderator. I thank all of them for their great commitment.

The Bay Colony Rail Trail (BCRT) is the 7-mile long recreational path that traverses through the towns of Needham, Dover and Medfield.

Dear Friends,

We’re delighted to announce that Needham Bank has offered another generous gift, along with a challenge, to support the Bay Colony Rail Trail Association (BCRTA).

Needham Bank was among the first donors to step up and support the BCRTA in a major way when we first started our adventure.

Because the bank is our local community bank – their folks work here and live here – they can see that a safe and beautiful rail trail would be a wonderful asset for all of us who live in the area.

To help us to push ahead with the trail, Needham Bank has extended a challenge that kicks off on January 2, 2013:

For every BCRT supporter who doesn’t currently have a checking account at Needham Bank and who chooses to open one, the Bank will donate $100 to the BCRTA. Just mention this offer when you open your account. The numbers get quite impressive when you consider that we now have a couple thousand supporters.

Eric Morse, VP at Needham Bank, explained, “We know that people don’t change banks every day, but for BCRTA supporters who are considering doing so in 2013, we hope you’ll consider Needham Bank. With branches in Needham, Wellesley, Dedham, Westwood and Medfield it’s a great way to show your support of BCRTA. If you’d rather not come into one of our branches, we’ll come to your office or home. It’s so easy to participate in this program. Please contact one of our Branch Managers to schedule an appointment.”

Park Street Books is moving to a new location on Main Street, the former Coldwell-Banker site. It will continue to be called Park Street Books, per Jim and Teresa James, because of their established on-line presence. Great for the town to have a great retail shop in such a prominent site.

Michael,
I wanted to reach out to all Massachusetts municipal officials about a Home Rule Petition the Town of Swampscott is pursuing relative to pension reform. The goal of this petition is to give freedom to each city and town in the Commonwealth to offer an affordable plan for retirement benefits to new hires. As you know, the State of Massachusetts currently mandates a defined benefit plan. In other words, we have no freedom to choose what is a financially sound plan for our city or town.

A quick visit to the PERAC web site details how towns from Andover ($75 million unfunded liability) to Melrose ($45 million unfunded liability) to Swampscott ($36 million unfunded liability) are facing onerous debt that is now and will continue to be a drain on investment in capital improvements, education and town services.

And it will get much worse if we don’t act soon.

Interestingly, the Government Accounting Standards Board (GASB) passed new rules for pension accounting that go into effect in 2013. Two key components of the changes will force pensions to use a much more realistic method of “discounting” or, what most people refer to as investment returns. The State still uses 8.25% as a discount rate for future investment returns by pensions. In its Annual Report, PERAC likes to refer to an average rate of return over the last 27 years of close to 9%. But the reality is that since 2000, the return is closer to 4%. This has a dramatic effect on unfunded obligations and as a result, how much of your property tax revenue is spent on benefits.

GASB will require all municipalities to use a number closer to 2% to determine a true accounting of each system. When that happens, look out below – taxpayers will be shocked to learn how much they are on the hook for in the future. Additionally, GASB will no longer allow for smoothing, which enables pension accountants to meter out the highs and lows, giving a skewed view of the current liabilities and assets. To read exactly what GASB will be requiring, click here.

I believe the State has not done enough to mitigate the risk of pension fund exposure to taxpayers. That is why I’m pushing a Home Rule petition that gives each municipality the right to choose a plan – for new employees – that it finds affordable. Ideally, the State would offer multiple plans to choose from, whether a defined benefit, shared risk or defined compensation plan. For those towns that want to continue down the same path they are on – no problem. But for those of us who are compiling unwanted liabilities and seeing retirees live longer while fewer current employees are paying into the existing plan – we’d have some relief.

This type of system is working in Connecticut, Florida and other states that allow for Home Rule. If you’d like to read articles on successful negotiations between unions and municipal government for new employee benefits, click here.

I’m asking you to join my efforts and help build a coalition for Home Rule. If you would like to see the language Swampscott currently plans to use as an Article this spring at town meeting, please email me and I’ll send over a copy. We are open to suggestions you may have as well.

The average single-family tax bill in FY12 increased $174 or 3.8 percent in FY12, an increase in line with recent average increases of less than 4 percent, according to the Municipal Data Bank. The increase in average single-family tax bills is largely a reflection of Proposition 2 1/2, which allows for an overall annual tax levy increase of 2.5 percent plus new growth.

The average value of a single-family home in Massachusetts in FY12 was $358,687, and the average property tax paid was $4,711. For FY11, the average value was $361,629, and the average property tax paid was $4,537. For FY10, the average value was $373,702 and the average property tax paid was $4,390. For FY09, the average value was $391,762 and the average property tax paid was $4,250. For FY08, the average value was $403,705 and the average property tax paid was $4,110. For FY07, the average value was $406,673 and the average property tax paid was $3,962.

The decline in the average property value of single-family homes in Massachusetts since 2007 is due to the decline in home values resulting from the 2008 banking industry crisis and the ensuing Great Recession. Since FY2007, the average value of a single-family home in Massachusetts has declined 12 percent. During that same period, the average single-family home property tax has risen 19 percent.

Despite the decline in the average single-family home property value since FY2007, for the 10 years between FY2002 and FY2012, the average value has increased 52 percent, from $236,229 in FY02 to $358,687 in FY12. In that same period, the average single-family tax bill has increased 56 percent from $3,015 in FY02 to $4,711 in FY12.

The drop in the average value of a single-family home of $2,942 from FY11 to FY12 is the smallest since values began their decline in FY2007, indicating that home values have started to stabilize.

Osler ”Pete” Peterson

Medfield Selectman

I started this blog to share the interesting and useful information that I saw while doing my job as a Medfield selectman. I thought that my fellow Medfield residents would also find that information interesting and useful as well. This blog is my effort to assist in creating a system to push the information out from the Town House to residents. Let me know if you have any thoughts on how it can be done better.

For information on my other job as an attorney (personal injury, civil litigation, estate planning and administration, and real estate), please feel free to contact me at 617-969-1501 or Osler.Peterson@OslerPeterson.com.

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